Cipla - Regulatory Set Back; U.S. Scale Up Gets Delayed: Prabhudas Lilladher

Prabhudas Lilladher Report

We cut our FY24E and FY25E earnings per share estimates by ~8% each, given Cipla Ltd.’s key facilities (Goa and Indore) stuck in Food and Drug Administration issues leading to delay in new launches like gAdvair in U.S.

FDA recently highlighted eight observations in the 483 letters issued to Cipla’s Pithampur (Indore) unit. Few observations raised are critical in nature and time consuming to resolve.

However, these issues are unlikely to escalate import alert and thereby have limited impact on existing business.

Despite earnings cut, we believe Cipla’s risk-reward is favorable at current levels. We expect 14% EPS compound annual growth rate over FY23-25E given the recent correction in stock price.

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